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This study investigates how AI literacy influences arts students’ continuance intention to use GenAI tools in Chinese higher education. Drawing on the Expectation Confirmation Model of IS Continuance (ECM-ISC) and the Social Construction of Technology (SCT), the model integrates confirmation of perceived usefulness, satisfaction, and privacy concerns. Structural equation modeling (N = 528) revealed a moderated double mediation effect: AI literacy enhances continuance intention via perceived usefulness and satisfaction, while privacy concerns significantly weaken the impact of perceived usefulness on continuance. Notably, perceived usefulness did not directly predict satisfaction, suggesting emotional or contextual boundaries. Findings highlight the importance of AI literacy and privacy awareness in shaping sustained engagement with GenAI in creative education.